Income Tax Appellate Tribunal - Hyderabad
M/S. A.P. Endowments Archakas And Other ... vs Assessee on 21 May, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER
ITA Nos. 1993 and 1994/HYD/2011
Assessment Years : 2004-05 and 2005-06
A.P. Endowments Archakas and other
Employees Welfare Fund Trust, ... Appellant
Hyderabad.
(PAN - AABTA6286F)
Vs.
Director of Income-tax(Exemption)-I, ... Respondent
Hyderabad.
Appellant by : Mr. M.V. Joshi
Respondent by : Mr. B.V. Rao
Date of Hearing : 21/05/2012
Date of Pronouncement : 06/06/2012
ORDER
PER ASHA VIJAYARAGHAVAN, J.M.:
Both these appeals filed by the assessee are directed against the order of the Director of Income-tax (Exemptions), Hyderabad, passed on 04/12/2006 for the assessment years 2004-05 & 2005-06.
2. The facts of the case are for AY 2004-05 that the assessee filed its return of income on 09/10/2006 declaring NIL income. The assessee trust has been formed by the State Government for the social welfare of Archakas and other employees of the temple in compliance with the directions of the Supreme Court. The corpus of the trust comprises of the contributions received from various Devasthanams. The assessee had applied for registration u/s 12AA of the IT Act, 1961 before the Director of Income-tax(Exemptions), Hyderabad.
3. The Director of Income-tax (Exemptions), held that by his order dated 04/12/2006 that the application filed is out of time, there being a 2 ITA NOs. 1993 & 1994/Hyd/2011 A.P. Endo wmen ts Arch akas and o ther Emplo yees Welf are Fund Trus t delay of 6 years 11 months 6 days. The DIT(E) further held that the delay in filing the application has not been explained properly and, hence, the delay was not condoned by him. Accordingly, the said trust was granted registration in the Register meant for application in form No. 10A vide F.No. DIT(E)/Hyd/64(06)/12A/06-07, with effect from 01/04/2006. The DIT(E) held that the registration is subject to fulfillment of the conditions laid down in 12A(a) of the IT Act and the registration does not ipso-facto exempt the income unless the provisions of section 11 & 12 of the IT Act, 1961 are adhered to.
4. Aggrieved, the assessee filed the appeal before us contending that the DIT(E) erred while passing the order wherein the exemption claimed by the assessee from the assessment year 1997-98 to 2005-06 has not been allowed on the contention that there is delay of 6 years 11 months 6 days in filing application for the registration.
5. We have heard the arguments of the both the parties and perused the record. We find that the assessee trust has been formed by the State Government for the social welfare of the Archakas and other employees of the temple in compliance with the directions of the Hon'ble Supreme Court and the assessee has filed return of income for the assessment year 2004-05 on 19/06/2006 declaring nil income.
6. We find in the grounds of appeal that the assessee has filed an affidavit explaining the cause for delay in filing the application. It has been mentioned in the grounds of appeal, the DIT(E) has not considered the reason for delay and not given reasonable opportunity of being heard. The assessee filed an affidavit, wherein it was affirmed as under:-
"The trust was made an application to the Chief Commissioner of Income-tax on 11/06/2003 for requesting for the exemption to the trust. The same readdressed by the Chief Commissioner of Income- tax for the reason that the power of granting 100% exemption from income tax is not with him.
The Endowments Commissioner has made frequent requests to the Chairman, CBDT having letter Nos. N1/39041/2003 on 12/08/2003, 3 ITA NOs. 1993 & 1994/Hyd/2011 A.P. Endo wmen ts Arch akas and o ther Emplo yees Welf are Fund Trus t Nos. N!/39041/2003 on 07/11/2003 and Nos. N1/39041/2003 on 22/03/2005 on the contention that the power of granting 100% exemption to the trust from the purview of the income tax lies with the Central Govt. represented by Chairman, CBDT, North Block, Ne w Delhi.
Due to the above reasons, the application for registration of the trust u/s 12AA(1)(b)(i) was made on 27/06/2006 with a delay of 6 years 11 months 6 days as during the above period.
Finally, the trust was made an application to the Director of Income- tax Exemption on 27/06/2006. This registration u/s 12AA(1)(b)(i) has been granted w.e.f. 01/04/2006 (i.e. the f irst day of the financial year in which the application is f iled.) As the circumstances were beyond the control of the assessee due to long delay in obtaining the exemption for the trust. Due to this, the trust could not file the application for registration of the trust within the stipulated time and hence the delay of 6 years 11 months 6 days which has been occurred may please be condoned and the registration for the trust may please be granted with effect from 1997-98 to till this date. Hence, the delay in f iling of appeal may please be condoned for the asst.year 2004-05."
7. How the power of condonation of delay is to be exercised, has been explained by the Apex Court in the case of Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) as under:-
( Pages 472 )" The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits ". The expression "suff icient cause " employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice that being the lif e-purpose of the existence of the institution of courts. It is common knowledge that the court has been making a justif iably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that:
1. Ordinarily, a litigant does not stand to benef it by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated.
As against this, when delay is condoned, the highest that can 4 ITA NOs. 1993 & 1994/Hyd/2011 A.P. Endo wmen ts Arch akas and o ther Emplo yees Welf are Fund Trus t happen is that a cause would be decided on merits af ter hearing the parties.
3. Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted af ter the prescribed period if the appellant or the applicant satisf ies the court that he had suff icient cause for not preferring the appeal or making the application within such period."
( Page 473) 4. " Every day's delay must be explained" does not mean that pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner.
5. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
6. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malaf ides. A litigant does not stand to benef it by resorting to delay. In f act, he runs serious risk.
7. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so."
8. Here we would also like to refer the finding of the Apex Court in the case of N. Balakrishnan V. M. Krishnamurthy, AIR 1998 SC 3222. The Apex Court held as under:-
"11. Rules of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation f ixes a life span f or such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lif e span must be f ixed for each remedy. Unending period for laundering the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium ( it is for the general welfare that a period be put to 5 ITA NOs. 1993 & 1994/Hyd/2011 A.P. Endo wmen ts Arch akas and o ther Emplo yees Welf are Fund Trus t litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively f ixed period of time.
12. A court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words 'suff icient cause' under section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain V. Kuntal Kumari, AIR 1969 SC 575 and State of West Bengal V. the Administrator, Howah Muni-capacity, AIR 1972 SC
749."
9. Reliance has also been placed in the case of Hon'ble Madras High Court in the case of Areva T and D India Ltd., Vs. JCIT, [2006] 287 ITR 555 (Mad). It is also be noticed that in the case of State of West Bengal vs. Administrator, Howrah Municipality, AIR 1972 SC 749, the Hon'ble Supreme Court held that expression "sufficient cause" should receive a liberal construction so as to advance the purpose of justice particularly when there is no motive behind delay.
10. In the present case, the trust has filed the application to the Chief Commissioner of Income-tax on the bona-fide belief that the Chief Commissioner was an appropriate authority in this regard. Further, the Endowment Commissioner has made frequent requests to the Chairman, CBDT on the belief that the power of granting 100% exemption to the trust from the purview of income tax lies with the Central Government represented by the Chairman CBDT. Due to these reasons, the trust could not file the application for registration of trust within the stipulated time before the DIT(E) and the registration has not been granted with effect from 1997-98 till today. The assessee based on his bonafide belief had been approaching the wrong authorities for granting exemption. We also find that the authorities who are in the knowledge of things have not advised the assessee regarding the person to whom the application should have made nor did they forward the application to the 6 ITA NOs. 1993 & 1994/Hyd/2011 A.P. Endo wmen ts Arch akas and o ther Emplo yees Welf are Fund Trus t correct authority, leading to the delay in filing of application to the correct authority by the assessee.
11. Since there was a sufficient cause for delay in filing the application, we condone the delay and remit the matter back to the file of the DIT(E), who shall decide upon the application of the assessee in considering the case in terms of section 12AA. Further the DIT(E) shall consider according registration with effect from the date of creation of the trust in accordance with law after providing reasonable opportunity of hearing to the assessee in the matter.
12. The facts for AY 2005-06 are mutatis-mutandis to the AY 2004-05 and, hence, following the conclusions drawn therein, we remit the issue to the file of the DIT(E) with similar directions.
13. In the result, both the appeals under consideration are treated as allowed for statistical purposes.
Pronounced in the open court on 06/06/2012.
Sd/- Sd/-
(D. KARUNAKARA RAO) (ASHA VIJAYARAGHAVAN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 6 th June, 2012
kv
Copy to:-
1) A.P. Endowments Archakas and other
Employees Welf are Fund Trust
C/o P. Murali & Co., Chartered Accountants,
6-3-655/2/3, 1 s t Floor, Somajiguda, Hyderabad - 32.
2) DIT (Exemptions)-Hyderabad
3) DDIT (Exemptions) - 1, Hyderabad
4) The Departmental Representative, I.T.A.T., Hyderabad